RENDERED: MAY 5, 2016
TO BE PUBLISHED
oittprrntr Court of Tcfirufurkv
2014-SC-000306-DG
COMMONWEALTH OF KENTUCKY APPELLANT
ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2012-CA-001697
FAYETTE CIRCUIT COURT NO. 12-CR-0136
CATON KAMIL JONES APPELLEE
OPINION OF THE COURT BY CHIEF JUSTICE MINTON
REVERSING
In our popular culture, operation of a criminal syndicate is commonly
associated with the underworld activities of mobsters and crime bosses. This
case involves none of those things. Today we must determine whether
wholesale enlistment of homeless men as tools in a scheme systematically to
defraud cell-phone companies is likewise covered under Kentucky's organized-
crime statute. We hold that it is.
I. FACTS AND PROCEDURAL BACKGROUND.
Caton Jones and Salena Anderson were Detroit, Michigan, residents with
a get-rich-quick plan. The plan involved driving to Lexington, Kentucky, and
employing homeless men to sign up for two-year cell-phone service contracts
with no intent to make payments in order to obtain high-end international
smartphones at discounted rates. A particular Blackberry phone with
international service was very popular on the secondary market and could be
purchased at a greatly discounted rate from service providers if the purchaser
agrees to a two-year service contract. Jones and Anderson would pay each
homeless person $20 for his efforts and resell the activated phones on the
secondary market to a great monetary windfall.
Lexington Police Department Detective Kevin Duane received a phone call
from the loss-prevention manager at an area Best Buy that a homeless man
was attempting to purchase a cell phone. Detective Duane went to the store
and approached the homeless man, ultimately convincing him not to purchase
the phone. He followed the man outside the store and observed him speaking
to another man in a van. Detective. Duane approached the man in the van and
learned he was from Detroit; the man eventually explained to the detective the
entire scheme. The Michigan man believed he was simply exploiting a loophole
in the law. For whatever reason, Detective Duane did not take him in for
questioning.
Over the course of the next several months, the Lexington Police
Department received reports from a number of cell-phone retailers that the
homeless cell-phone scam continued. But each time law enforcement arrived at
the store, the men (and the van) had already left. Later, Detective Duane finally
apprehended one of the phone purchasers. After reading the man his Miranda
rights, the man informed him he was a resident of a local homeless shelter and
he was recruited by people in a van offering each resident $20 for every cell
phone purchased. To be sure, the man had purchased several cell phones (and
contracts) that day. And he admitted to Detective Duane that he had no
intention of honoring the two-year service contract he signed at each location.
2
Detective Duane then followed the man outside the store to the van in
the parking lot. Around the same time, Jones was returning to the van from a
similar cell-phone retailer nearby. Detective Duane also found Anderson and a
number of other men sitting in the back of the van. Jones was very cooperative
with Detective Duane, and fully explained the situation. After obtaining
consent to search the van, he also discovered several cell phones, a
handwritten budget detailing the entire operation, and receipts for phones and
service contracts purchased by twelve different people. Jones and Anderson
were then taken to police headquarters and Jones provided a recorded
statement after receiving his Miranda warnings. Detective Duane then seized
all of their equipment and cell phones, leaving them just enough cash to return
to Detroit.
Jones and Anderson were charged with one count of "Engaging in
Organized Crime: Criminal. Syndicate by managing, supervising, and/or
directing individuals to acquire retail merchandise including cell phones, by
deception and/or fraud, with the intent to resell it." Detective Duane admitted
that though the homeless men could certainly be charged under the organized
crime statute as well, he intentionally chose not to penalize them "so he could
sleep at night." Jones appeared in court and knowingly and voluntarily waived
his right to counsel. He presented no evidence in his defense at trial, and the
jury found him guilty. The jury fixed his punishment at the statutory-minimum
five years' imprisonment.'
1 Anderson never appeared for trial; a warrant was issued but her charges were
dismissed without prejudice following Jones's conviction.
3
Jones filed two post-trial motions with the trial court seeking a new trial
and, alternatively, seeking to probate his sentence. The trial court denied a new
trial but agreed to probate his sentence. He was accordingly sentenced to the
minimal five-year sentence, probated for five years. Jones then appealed the
judgment to the Kentucky Court of Appeals, contending that he was entitled to
a directed verdict. The panel majority agreed and reversed his conviction,
concluding that there was insufficient evidence to prove he and his
conspirators collaborated under the "continuing basis" necessary to sustain an
organized-crime conviction.
We granted discretionary review to determine whether the
Commonwealth presented sufficient evidence for a jury to conclude beyond a
reasonable doubt that Jones engaged in a continuing criminal operation.
Reviewing the plain meaning of the statute's text, today we hold that Jones was
not entitled to a directed verdict. We accordingly reverse the Court of Appeals'
decision and reinstate the trial court's judgment.
II. ANALYSIS.
A. Standard of Review
For its first and only claim of error, the Commonwealth insists Jones was
not entitled to a directed verdict because the Commonwealth sufficiently proved
he was leading a continued criminal collaboration. At the close of the
Commonwealth's evidence, Jones moved the trial court for directed verdict on
the ground that he had not committed a crime. The trial court denied his
motion. To be sure, the Due Process Clause of the Fourteenth Amendment
certainly "protects the accused against conviction except upon proof beyond a
reasonable doubt of every fact necessary to constitute the crime with which he
is charged." 2 Our standard of review for denial of a directed verdict is whether,
under the evidence as a whole, it would be clearly unreasonable for the jury to
find Jones guilty. 3 We construe all evidence below in a light most favorable to
the Commonwealth. 4
B. Jones was not Entitled to a Directed Verdict.
The Kentucky Penal Code offers a broad description of precisely what
activity is subject to criminal liability for participation in organized crime.
Kentucky Revised Statutes (KRS) 506.120 establishes nine classes of activities
for which a "person, with the purpose to establish or maintain a criminal
syndicate or to facilitate any of its activities" may be subject to prosecution. 5 Of
these nine activities, six are potentially applicable to this case:
1. Organize or participate in a criminal syndicate or any of
its activities. 6
2. Provide material aid to a criminal syndicate or any of its
activities, whether such aid is in the form of money or
other property, or credit.?
3. Manage, supervise, or direct any of the activities of a
criminal syndicate, at any level of responsibility. 5
4. Commit, or conspire or attempt to commit, or act as an
accomplice in the commission of, any offense of a type in
which a criminal syndicate engages on a continuing
basis. 9
5. Commit, or conspire or attempt to commit, or act as an
accomplice in the commission of more than one (1) theft
2 In re Winship, 397 U.S. 358, 364 (1970).
3 See Commonwealth v. Fletcher, 59 S.W.3d 920, 921 (Ky. 2001).
4 See Commonwealth v. Jones, 283 S.W.3d 665, 668 (Ky. 1991).
5 KRS 506.120(1).
6 KRS 506.120(1)(a).
7 KRS 506.120(1)(b).
8 KRS 506.120(1)(c).
9 KRS 506.120(1)(e).
5
of retail merchandise with intent to resell the
merchandise.'°
6. Acquire stolen retail merchandise for the purpose of
reselling it where the person knew or should have known
that the merchandise had been stolen."
Specifically, Jones was indicted for "managing, supervising and/or
directing numerous other individuals to acquire retail merchandise including
cell phones, by deception and/or fraud, with the intent to resell it." The
indictment most closely resembles the retail-merchandise-theft component of
the statute, though it also appears to incorporate Jones's culpability as the
leader and organizer of the scheme. Instructions to the jury provide more
clarity. It is unmistakable that the Commonwealth prosecuted Jones under a
theory that he engaged in a criminal syndicate to commit retail-merchandise
theft with the intent to resell the stolen merchandise.
There is no doubt that Jones organized, managed, and participated in
the scheme, he is the architect of the plan. But the most critical question in
determining Jones's criminal liability is whether his plan may be properly
labeled a "criminal syndicate." In fact, Jones denies any criminality in his
actions; rather, he contends he simply took advantage of the laws and exploited
a loophole, as any successful entrepreneur would. The statute offers
tremendous assistance in this inquiry. A criminal syndicate is defined as either
"five (5) or more persons, or, in cases of merchandise theft from a retail store for
the purpose of reselling the stolen merchandise, two (2) or more persons,
10 KRS 506.120(1)(h).
11 KRS 506.120(1)(i).
collaborating to promote or engage" 12 the commission of "any theft offense as
defined by KRS Chapter 514." 13
So in conducting our directed-verdict review, there are four elemental
conclusions that based on the evidence presented at trial a reasonable jury
must be able to reach beyond a reasonable doubt: (1) that a "theft" occurred in
furtherance of Jones's scheme; (2) that two or more persons were involved; (3)
that the persons collaborated in furtherance of the plan; and (4) that the
scheme operated on a continuing basis.
1. A theft occurred.
The threshold issue we must address is whether sufficient evidence was
presented at trial for the jury reasonably to conclude Jones's scheme was a
"theft." Though the statute's definition of "criminal syndicate" includes any
theft offense in KRS Chapter 514, the jury in this case was instructed on a
theory that Jones and his minions acquired the cell phones by deception—an
allegation Jones strongly denies. Instead, Jones suggests the phones were
legally purchased and he bears no liability from the homeless mens' failures to
perform on their two-year service contracts.
Under Kentucky law, a person is guilty of theft by deception if "the
person obtains property or services of another by deception with intent to
deprive the person thereof." 14 The statute further defines "deceive," in relevant
part, as intentionally "creat[ing] or reinforce[ing] a false impression, including
12 KRS 506.120(3)(emphasis added).
13 KRS 506.120(3)(c).
14 KRS 514.040(1).
false impressions as to law, value, intention, or other state of mind." 15 So
under the Commonwealth's theory of the case, theft by deception occurred
when Jones's homeless enlistees obtained the phones by signing a service
contract they had no intention of honoring. The Commonwealth presented
testimony from some of the homeless men verifying that they had no intention
of complying with the terms of the various service contracts they signed.
Jones rebuts the Commonwealth's theory primarily by denying that the
phones were unlawfully obtained. He argues that they were legally purchased
merchandise at the time of his arrest. The Commonwealth rebutted this
allegation with testimony from cell-phone company employees explaining
precisely how scams like Jones's affect their businesses. The employees
explained to the jury that the companies subsidize part of the cost of the phone
in exchange for a two-year service contract and the remaining cost of the phone
is recouped over the course of payment. Individual sales operatives work for
base pay plus commission. If someone cancels the service contract or does not
pay during the first 90 days of service, the lost money is taken from the
employee's paycheck. Moreover, employees testified that they believed that they
may be sued for discrimination if they refuse to sell devices to suspicious-
looking people. So the testimony adequately informed the jury that by
purchasing a phone and service contract with no intention to honor the
contract Jones and his team "deprived" these businesses in an immediate and
quantifiable manner.
KRS 514.040(1)(a).
8
But Jones counters this testimony in two ways. He first defends the
legality of his activities by criticizing the phone companies' business models. To
him, there was no deprivation of property from the companies—they only made
a foolish business decision. Fortunately, Chapter 514 includes a robust
definition of deprive as applied to theft-related offenses. Under the Kentucky
Penal Code, deprive means either "No withhold property of another
permanently or for so extended a period as to appropriate a major portion of its
economic value or with intent to restore only upon payment of reward or other
compensation," 16 or to "dispose of the property so as to make it unlikely that
the owner will ever recover it." 17 To us, a reasonable jury could conclude that
either definition could apply: Jones intended permanently to withhold the
remaining portion of the subsidized cost of the phone.
Second, Jones suggests that his plan narrowly invokes a loophole in the
theft-by-deception statute. Specifically, he contends the provision declaring
that "deception as to a person's intention to perform a promise shall not be
inferred from the fact alone that he did not subsequently perform the promise"
categorically exculpates any potential theft offense relating to the service
contracts. But invoking this provision as a defense is logically fallacious; the
provision only stands for the proposition that failure to pay alone is not enough
to establish theft-by-deception. In the immediate case, the Commonwealth
presented ample testimony from Jones's associates affirmatively establishing
intent to deceive. Reliance on this provision as a complete defense is misplaced,
and it is certainly not enough to entitle Jones to a directed verdict.
16 KRS 514.010(1)(a).
17 KRS 514.010(1)(b).
9
There was sufficient evidence for a reasonable jury to find a theft
occurred.
2. There were more than two participants.
For our next inquiry, we must determine whether statutorily required
number of participants was involved in this scheme to qualify as a criminal
syndicate. As referenced above, the statute mandates either five or more
participants, or, in the case of retail-merchandise theft, two or more
participants. 18 The Commonwealth charged Jones on the latter qualification,
and the instructions to the jury reflected that theory. In addition to Salena
Anderson, the Commonwealth identified at least a dozen homeless
participants. And some of them testified at trial. It is undisputed that the plan
was executed by a cadre of homeless men. So we can conclude that a
reasonable jury could find that the cell-phone scam was conducted by a group
of two or more participants.
3. The group collaborated in furtherance of the scheme.
The next element to establishing the existence of a criminal syndicate is
a requirement that participants "collaborated" to engage in theft by deception.
We have previously held that proof of collaboration does not require a showing
"that each participant in the criminal scheme collaborated with or was aware of
the collaboration of the other participants." 19 Similarly, "collaboration in the
statute means simply collaborating in the scheme, and it is not necessary for
the Commonwealth to show that each participant collaborating in the scheme
collaborated with or even was aware of the collaboration of the other
18 See KRS 506.120(3).
19 Edmonds v. Commonwealth, 906 S.W.2d 343, 348 (Ky. 1995).
10
participants." 20 So to us, the collaborating element is satisfied if the
Commonwealth can establish enough evidence of two or more participants with
general knowledge of the scheme to acquire fraudulently the international cell
phones. And we conclude the Commonwealth met this burden.
First and foremost, evidence of Anderson's involvement should be
enough to establish collaboration. From the facts presented in this case, it
would appear that Jones and Anderson are co-architects; at the very least
Anderson could be aptly described as an accomplice to Jones's plan with full
knowledge of what they hoped to achieve. Under the loose understanding of
collaboration that we have previously articulated, proof of Anderson's
involvement should be sufficient to take the charge to the jury. Anderson was
not prominently featured in the Commonwealth's proof, but her involvement
was at least referenced throughout the trial.
Even if we exclude Anderson from our calculus, the Commonwealth's
evidence of the homeless participants' complicity in the plan meets the
evidentiary burden as well. When Detective Duane received consent to search
Jones's van, he found receipts for two-year service contracts in the name of a
dozen different homeless men. And some of those men testified at Jones's trial
about their roles in the scheme—that Jones would give them $20 for each
phone they obtained by signing a service contract. This general understanding
that Jones asked them to acquire a cell phone by creating a false impression is
sufficient to us for a reasonable jury to determine two or more persons
collaborated to effectuate Jones's theft-by-deception plan.
20 Commonwealth v. Phillips, 655 S.W.2d 6, 9 (Ky. 1983).
11
4. The group collaborated on a continuing basis.
The final and most contentious inquiry in determining whether Jones's
plan can be characterized as a criminal syndicate is whether the plan was
intended to operate on a continuing basis. The Court of Appeals majority, in
reversing Jones's convictions, held that he was not guilty of operating a
criminal syndicate because there was insufficient evidence that he collaborated
on a continuing basis with the participants testifying at trial. The panel
majority's ruling misstates our prior interpretations of the statute's command.
In support of its decision reversing Jones's conviction, the Court of
Appeals majority relied on our recent holding in Parker v. Commonwealth. 21
And to be sure, we vigorously interpreted Kentucky's organized-crime statute in
its most paradigmatic application—gang-related violence and drug trafficking.
In Parker, we reversed a criminal defendant's criminal syndicate conviction
because the Commonwealth provided insufficient evidence to prove he
collaborated with four or more persons 22 on a continuing basis dealing drugs
as part of his association with the Crips gang. But there are critical
discrepancies in the present case that are distinct from Parker.
In Parker, we held that there was insufficient evidence of a continuing
basis because the Commonwealth's case centered on a "singular drug deal that
resulted in Barnes' death." 23 The Court of Appeals majority reached a similar
.
result in this case, taking issue that most of the Commonwealth's evidence
21 291 S.W.3d 647 (Ky. 2009).
22Id. Because Parker was not indicted under a merchandise-theft theory, his
case was reviewed under the standard criminal-syndicate definition. So the
Commonwealth needed to prove five or more collaborators, rather than merely two or
more necessary for guilt in Jones's case.
23 1d. at 675.
12
zeroed-in on Jones's activity on one particular day. But in Parker, we also
reaffirmed that "[t]he Commonwealth is not held to proving any specific
number of incidents or any element of time, but must show by the proof what
the jury could infer from the evidence as intent to collaborate on a continuing
basis."24 Unlike Parker, where the evidence focused on one drug deal, the
Commonwealth in this case presented evidence of multiple purchases in a
single day, repeated criminal acts. Some homeless participants testified to
going to multiple stores in one day. And Jones made multiple trips to Lexington
to effectuate his plan. The Commonwealth did enough to ensure the jury knew
of far more than one instance in furtherance of the scheme, which Parker
strongly condemns as insufficient proof of a continuing basis.
We also refused to find a continuous collaboration in Parker because one
witness testified that "every man did their own thing." 25 Though the
Commonwealth in Parker pursued a criminal-syndicate theory premised on
drug trafficking, witness testimony stated that "the Crips made their own deals
and sold their own drugs." 26 But such autonomy is unquestionably lacking in
this case. Though it is true each participant went into each store alone and
signed every contract individually, it is equally true he did so at Jones's behest.
Jones drove all of the men to each store, directed which store to enter, told
them which phone and plan to purchase, and compensated each man that
successfully returned with the international smartphone. It is clear from the
24 Id. (quoting Phillips, 655 S.W.2d at 9.).
25 Id. at 676.
26 Id.
13
Commonwealth's proof that each participant in Jones's scheme did not, in
contrast to Parker, "do their own thing."
And finally, as part of its continuing-basis analysis, the Court of Appeals
spent considerable time discussing whether Jones intended to continue his
scheme into the future. But this is an unnecessary inquiry. 27 Even if we
willingly suspend disbelief that Jones did not know he was perpetuating theft
and that after learning of the unlawful nature of his operation he would
abandon his business, there remains ample evidence that he was conducting
this collaboration on a continuing basis at the time of his arrest. At minimum,
the Commonwealth presented enough evidence to allow reasonable jurors to
decide for themselves.
5. Jones intended to form a criminal syndicate.
Much of the difficulty in this case is derived from the unconventional
nature of this factual application to Kentucky's organized-crime statute. But as
a reviewing body interpreting a statute, it is our duty to give effect to the plain
meaning of the statute's text. And "a person's mistaken belief that his conduct,
as a matter of law, does not constitute an offense does not relieve him of
criminal liability." 28 So it is immaterial to our analysis whether Jones
subjectively knew he was forming a criminal syndicate. The sole guiding factor
is whether the Commonwealth produced enough evidence to show that the text
encompasses his actions. And we hold the Commonwealth met this burden.
27 See Hill v. Commonwealth, 125 S.W.3d 221, 231 (Ky. 2004) (evidence that a
criminal scheme to smuggle marijuana into prison lasted for two to five months was
sufficient to support finding a criminal syndicate operating on a "continuing basis"
despite testimony that a participant planned to "get out").
28 KRS 501.070(3).
14
We have no doubt that Jones is no Mafioso. But the text crafted by the
legislature and 'signed into law by the governor covers more than the gangland
imagery synonymous with organized crime. The statute plainly criminalizes
organized efforts to engage in merchandise theft. And Jones created such an
organization whether he subjectively classified it as criminal or not.
III. CONCLUSION.
For the foregoing reasons, we reverse the Court of Appeals' decision and
reinstate the trial court's judgment.
All sitting. All concur.
COUNSEL FOR APPELLANT:
Andy Beshear
Attorney General of Kentucky
Christian Kenneth Ray Miller
Assistant Attorney General of Kentucky
COUNSEL FOR APPELLEE:
Willie Edward Peale Jr.
Peale Law Office
15